Region faces commodity, demographic shocks. Baseline scenario is 1.5 percent growth in 2016-2018

Weak global growth, a fading demographic boom, lower commodity prices and deteriorating fiscal positions are underscoring the urgent need for major reformulations in fiscal policies of Latin America and the Caribbean, according to the Inter-American Development Bank’s annual macroeconomic report released here today.

Most countries need to trim fiscal spending. However, the report argues against cutting capital investments but rather undertake more fundamental reforms.

“Fiscal adjustments are never easy,” said IDB Vice President Santiago Levy. “Many countries are in the difficult position of having to act now or face more painful adjustments later on. The good news is that there is room to increase spending efficiency and rebalance fiscal policy to improve growth and protect the many social gains that have been achieved over the past decade.”

Read the full article on the Inter-American Development Bank.